Some random thoughts on game theory, behavioural economics, and human behaviour

Friday, 27 February 2015

Time to 'privatize' the NHS?

Labour's pitch for the upcoming UK general election has been simple - let's talk about the National Health Service. Particularly headline grabbing was the '100 days until the election, 100 days to save the NHS as we know it' campaign. To focus on the NHS may seem like a simple winning strategy for Labour given the rollercoaster of 'NHS in crisis' stories hitting the news in recent months. But, I think labour strategists may have badly misjudged this one. After years of dodging the issue the British public may finally waking up to the idea that we can only preserve the 'NHS as we know it' with some pretty radical change.

The NHS is a publicly provided health care system that is centrally funded and free at the point of delivery. Labour is broadly committed to maintaining that status quo. They reject private involvement in providing health care. And they reject anything other than a free health service. 'Save our NHS, privatization is putting our NHS at grave risk' sums up the position nicely. The truth is, though, the NHS has to change. There simply is not enough money to fund the standard of service that Britons have got used to. So, we either accept a low standard of care or move to something different.

The main problem with the NHS model is one of moral hazard: If the government guarantee a free health service then there is less incentive to stay healthy. And if people take more health risks then health costs will be higher than they need to be. Simple though it is this chain of logic needs some justification. After all, no one wants to be ill and so there are some big incentives to stay healthy! The 'free at the point of delivery' mantra has, however, created a society that expects great things from its NHS. That means this is not just a money issue; expectations of the NHS have grown well beyond what it can reasonably deliver. This also feeds into another consequence of moral hazard: people expect service immediately even for relatively minor problems.

Charging for health care has already begun with a largely privatized dentistry, charges for prescriptions, and a growing private sector for routine operations. This trend will surely have to continue. What's interesting though are attitudes towards paying for health care. The 'free at the point of delivery' mantra is deeply ingrained in the British psyche; anyone who dared question its merits faced criticism. That's why labour might think it is on safe ground defending the NHS as we know it. Things though appear to be changing.
I think this change partly reflects a growing understanding of individual choice in health care: people choose to get drunk on a Friday night, they choose to smoke, they choose to not eat healthy foods or exercise. Why should the taxpayer pay for health care that was avoidable? Surely the individual should take some of the responsibility? Another thing changing attitudes is the growing recognition that something has to give. The previous labour government put a lot of money into the NHS but that merely delayed the inevitable. People want a high quality health service and the current system is creaking at the edges. Can we not do better?
Various ideas have been proposed to put additional charges into the NHS. Maybe it will be a nominal fee to visit a GP or A&E. Maybe benefits will be withdrawn from those who refuse to abide advice on healthy eating. Maybe it will be increasing private options in the NHS. One thing, however, seems clear and is often overlooked. Once charges are unleashed there is likely to be a run away train of increased charges. This is what happened with dentistry and is the kind of thing that will scare plenty of people. So, there needs to be a proper debate on what a future health service will look like. That is clearly not going to happen in this election with the conservatives afraid to mention the issue. Time is running out to really save the NHS as we know it.